Two Democrats seeking a compromise on the Bush tax cuts have suggested that a new tax rate be added for Americans making over $500,000 a year. Currently there are tax rates at roughly $250,000 and $375,000. Reps. Bill Pascrell (D-NJ) and Michael Capuano (D-MA) want to add the $500,000 tax bracket and extend that bracket at current rates for one year, while extending the rest of the tax cuts for 5 years. It’s basically a version of the decoupling strategy which the White House and leading Democrats would like to see. They feel this will eventually make it easier to let those tax rates expire.

Which is why Republicans, knowing they have over 60 reinforcements coming into the House by next year, and knowing that they can merely hold the current tax rates for the middle class hostage as long as they don’t decouple them, will never agree to this.

House GOP Whip Eric Cantor (Va.) threw cold water on a proposed plan to “decouple” the tax cuts, authorizing a temporary extension of the cuts for the wealthy and a permanent extension for the middle class, saying, “Taxes shouldn’t be going up on anybody right now.”

Asked on Fox News if Republicans or Democrats will give on the provisions of an extension, Cantor said, “No. I mean, one of the ideas that we’ve seen floated was this decoupling … That is a … signal right then and there that we’re going to raise taxes on small businesses. That’s exactly what we don’t need right now. What we need is certainty.”

There’s a great argument for having more brackets anyway, one that Democrats could win in the court of public opinion if they cared about those things. Right now, there’s enough of an aspirational class that calling people who make over $250,000 a year “rich” (which they are) confuses those who want to get to that point and are wondering why they’re being demonized. But adding in a millionaire’s bracket, or even further up the scale, would isolate the mega-rich from the merely rich, and would make completely clear who Republicans are working for.

Anyway, that appears to be a fantasy-world scenario. The tax cuts will get extended, and it’s likely they’ll all move together. This may not happen in the lame duck session, but it’ll happen eventually.

Anyway, that appears to be a fantasy-world scenario. The tax cuts will get extended, and it’s likely they’ll all move together. This may not happen in the lame duck session, but it’ll happen eventually.

Could the Dems [and I use the term loosely] let the tax cuts expire, and then force the next Congress to pass them?

Do the Repubs have enough votes to override a veto, should Mr. Spaghetti Spine choose to exercise it?

At least this thing could be tied up for several months. It’s two years until the NEXT debacle. Might as well cause as much trouble as possible in that time, because the Repubs are not going to “play nice,” no matter WHAT the Democrats do.

Dems ought to be thinking, “what would Republicans do in this lousy situation?”

if they wouldn’t have punted on the budget, they could’ve passed the tax cuts for the middle class using reconciliation. Lots of bad decisions, that, hmmm, will end up benefiting those with big money, yet offer a moticum of cover the faithful will believe

I love how they always trot out the small businesses thing. These jackasses don’t even know what a small business is if they think a tax increase on people making over $500,000 a year is against small business owners. They also don’t seem to comprehend the difference between income tax and business tax.

Yet they’re never called out on this obvious bullshit. Not by the media, not by their supposed opponents, nobody says a damn thing.

It’s not that we need to collect more federal taxes in the short term. In fact it would be helpful to the economy if we collected less.

We just need to push whatever tax burden there is up to the top income brackets. If we did that, there’d be more room for a FICA holiday for workers paychecks. That’s something which would actually help steady the economy.

Sucking 3 trillion out of the economy would push unemployment to what, 15-20%?
That should really help with the deficit.

Raising taxes does not “suck money out of the economy”, since the economy includes the government. Spending money on public sector hiring adds to the economy, and to tax revenues. People who are paying taxes already have income, the money needs to go the people with no income.

We absolutely cannot afford any more tax cuts at any level any more. Tax cuts are what have killed our economy. If you want to spend $3 trillion on a tax cut for the middle class, raise taxes on the upper class by $3 trillion first. Tax cuts need to be paid for with tax increases.

Isn’t reconciliation the reason that the Bush Congress structured the original tax cut as a 10-year? Or rather, there were 60 votes needed for a tax cut that didn’t increase the deficit? So they went with a set that expired in 10 years–whether or not America could really afford it?

It just seems to me, that if 62 Democrats lost (or some figure like 62) because the public is upset about “all the deficit spending”, it would be very hard for Nancy Pelosi to get the votes to extend the tax cuts for the rich.

The lame duck Congress has 255 Democrats, of which less than 218 will be re-appearing in 2011. The ones not returning have already been “punished at the polls”. Why would they risk any more political capital on blowing an extra $4 trillion or even $700 billion hole in the federal debt?

Probably I don’t know enough about the process. I thought lame ducks had nothing to lose until the next vote two years from now. Why wouldn’t Pelosi and Reid let all the Bush tax cuts expire and at the same time use their current majorities and reconciliation to craft a quick bill that would re-create or adjust middle class tax rates as they please? And while they’re at it, couldn’t they use the same reconciliation process to undo Bush’s capital gains tax cuts as well?